Does the public have a right to know which U.S. banks might have failed if they hadn't received bailout loans from the U.S. government in 2008?
That's the central issue behind a legal battle between the Federal Reserve, which prepared the analyses, and Bloomberg, which filed a Freedom of Information Act request to get the Fed's worksheets.
The Fed says the release of the data, which reportedly includes the names of the banks and the amounts they borrowed, would stigmatize those banks and discourage others from coming forward to get assistance, according to an Aug. 25, 2010, Bloomberg report, "Fed Seeks Delay of Bank Data Release While Considering Appeal."
Bloomberg's point of view wasn't outlined in the article, but news organizations generally believe the public has a right to know almost everything the government does. That's why the Freedom of Information Act exists: to allow the public, often in the person of news reporters, to gain access to documents the government might otherwise want to keep secret.
It's tempting to suggest the argument may be moot because the documents are two years old. But the stale state of the facts is due in part, to the Fed's unwillingness to release the information. Foot-dragging shouldn't be allowed to stand as a successful ploy to avoid a legal responsibility, if one exists.
It's tempting also to suggest that the argument may be moot because whether a bank would have failed is hypothetical. Yet hypotheticals can cause considerable harm, so perhaps it's all the more important to test the assumptions.
The real risk, of course, is that the information will be dumbed-down to the point at which it will be misleading since most people are more likely to read the headlines than delve into the details and consider the context.
So, should the Fed be forced to release the term sheets? Or should the government protect the banks' privacy?